Rebound expected to continue, though overall quantity may be less than last year
After successive declines for six months, vegetable oil imports rose 19 per cent in May, due to less availability from local crushing units.
Data compiled by the apex trade body, the Solvent Extractors’ Association (SEA), show that imports shot up to 664,133 tonnes in May as compared to 558,765 tonnes in the corresponding month last year. This is the first monthly rise in arrivals in this oil year (November-October).
Says B V Mehta, executive director of SEA, “Nearly 70 per cent of the estimated 28 million tonnes of oilseed output has been crushed so far this year, resulting in higher availability from local sources. Crush margins averaged Rs 1,000 per qtl this year, as against a negative Rs 800-1,000 per qtl parity last year. Oil availability from local sources was very low last year, as mills were not aggressively crushing seeds due to negative margins.”
During the first seven months of the current oil year, however, imports continued to remain lower at 4.27 mt, a decline of 12 per cent from 4.85 mt in the same period last year. SEA attributed four basic factors for the slump in overall imports. One, higher production of oilseeds during kharif and rabi seasons. Two, increased crushing activity boosted local availability. Three, good crushing parity due to high price of oil and export demand for oilmeals. Four, negative margin in imports and high prices of edible oil had stopped demand growth.
He believes the upsurge would continue during the remaining five months of this year, due to the possibility of further decline in availability from local sources.
Nearly half the remaining 30 per cent of the oilseeds available in the country are expected to be supplied to crushing units for processing, while the rest would be used for sowing next season and direct consumption. Therefore, another 700,000-800,000 tonnes of oil will possibly be made available from local mills.
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As a consequence, import will increase during the rest of the current oil year. Mehta estimates total imports would remain 800,000 tonnes lower than the last year’s record at 9.2 mt.
“Veg oil import is unlikely to surpass 8.4 mt this year,” Mehta said, adding that price-sensitive rural consumers may lower buying due to upward revision in retail prices. Prices have surged 50 per cent in the past year. with the benchmark RBD palmolein up to $1,237 a tonne in May as compared to $829 a tonne last year. Crude palm oil jumped to $1,163 a tonne versus $803 a tonne earlier, crude soybean oil to $1,287 from $844 a tonne and crude sunflower oil to $1,399 a tonne from $902 a tonne in May last year.
Negative parity in imported oil was also seen because of appreciation in the rupee, up to 44.85 against the benchmark dollar in May, as against 46.50 in the comparable month last year.
The stock of edible oil as on June 1 at various ports was estimated at 470,000 tonnes (CPO 320,000 tonnes, RBD palmolein 30,000 tonnes, degummed soybean oil 60,000 tonnes and crude sunflower oil at 60,000 tonnes) and about 875,000 tonnes in the pipeline. Total stock was, therefore, estimated at 1,345,000 tonnes as compared to 1,275,000 tonnes a month before.